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EurAnalysis

  • #52,501
  • Sep 5, 2012 7:31am Sep 5, 2012 7:31am
Quoting rekon67
Uncertainity of Market may reflect today and tomorrow.

ECB Press Conf tomorrow!

Attachment
Price is playing in higher range. Sale orders are safe at 1.264x area, later 1.273x area.
  • #52,502
  • Sep 5, 2012 7:35am Sep 5, 2012 7:35am
Quoting Thijs
Can you explain how you sterilize UNLIMITED amounts ?
That's a great question and I just so happen to have the answer.

First you buy €50 bln in bonds
Then you hold an auction for one week notes to soak up the 50 bln in cash out of circulation
Then the banks who buy the bills, use the bills as collateral and can draw cash on them for any liquidity they need.

So, in effect, it becomes a controlled QE in so far as the liquidity is only injected into circulation as needed by the banks and not dumped in by the ECB as excess liquidity

The only risk here is that as the excess amount grows, it will become more and more challenging for the ECB to soak up all of it every week.

The former SMP program is already at 209 bln, so any more bond buying will just add to that amount they will have to sterilize every week.
Those who say it cannot be done should not interrupt those who are doing it
  • #52,503
  • Sep 5, 2012 7:37am Sep 5, 2012 7:37am
Quoting PipTrapper
That's a great question and I just so happen to have the answer.

First you buy €50 bln in bonds
Then you hold an auction for one week notes to soak up the 50 bln in cash out of circulation
Then the banks who buy the bills, use the bills as collateral and can draw cash on them for any liquidity they need.

So, in effect, it becomes a controlled QE in so far as the liquidity is only injected into circulation as needed by the banks and not dumped is by the ECB as excess liquidity
“Don't cry because it's over, smile because it happened.â€Â
  • #52,504
  • Sep 5, 2012 7:43am Sep 5, 2012 7:43am
Quoting FXSwissTrader
+70 pips G/U from low value area to high value area/daily range high.

May I have another?
I'm out! 100+ pips E/U - Value area low & near psychological 1.25 level to yesterday afternoon's POC high volume area. Should have been patient with G/U. Would've been a 200+ pip morning. Sell limit is sitting at 1.2620. Hope everyone made pips!
  • #52,505
  • Sep 5, 2012 7:45am Sep 5, 2012 7:45am
If Mario really meant business, he’d leave the bond-buys unsterlized

Written by Jamie Coleman
September 5, 2012 at 12:21 GMT

Instead, it looks as though it will merely be a revival of the failed SMP (Securities Market Program) with fewer restrictions in terms of size and duration of the program.

By sterilizing the bond buying (draining the proceeds of the funds injected into the market via money-market operations), Draghi appeases the Bundesbank but saps the bond-buying program of the euro-weakening that is so desperately needed by the European export sector.

There is no mention in the Bloomberg story of whether the bonds purchased would be senior to bonds owned by the private sector, as was the case in the SMP, and which turned out to be a fatal flaw for that program.

My guess is that the market will ultimately be disappointed if what we’ve heard this morning is the sum total of the program.
Those who say it cannot be done should not interrupt those who are doing it
  • #52,506
  • Sep 5, 2012 7:46am Sep 5, 2012 7:46am
Quoting FXSwissTrader
I'm out! 100+ pips E/U - Value area low & near psychological 1.25 level to yesterday afternoon's POC high volume area. Should have been patient with G/U. Would've been a 200+ pip morning. Sell limit is sitting at 1.2620. Hope everyone made pips!
Great Show
  • #52,507
  • Sep 5, 2012 7:47am Sep 5, 2012 7:47am
Quoting foto
Hey Nathan,
There is always the chance for early retirement once the Presidency changes hands. Dallas's Fisher comes to mind as someone more in tune with a differing monetary policy.
These things happen in the political sphere. For instance I expected Joe Biden to make another inadverdent (intentional ) slip of the tongue if he was deemed a liability.

But back at the races USD/Cad is not crashing as would be expected, so maybe more to this Bond leak then meets the eye. Will see what happens at 9 a.m EST
AUD/USD is not doing much and GBP/USD...
Looks like the EUR that moves the USD. CAD is untouched.

in 15 mins CADBOC Rate Statement & CAD Overnight Rate
  • #52,508
  • Sep 5, 2012 7:48am Sep 5, 2012 7:48am

ATTENTION ALL LURKERS AND NEW POSTERS

BEFORE POSTING ANYTHING IN THIS THREAD, YOU MUST READ AND AGREE TO ALL THE RULES AND OBJECTIVES POSTED ON PAGE 1

CURRENT POSTERS WHO HAVE MADE SIGNIFICANT CONTRIBUTIONS TO THIS THREAD ARE GIVEN A FRIENDLY NUDGE WHEN THEY STEP OUT OF LINE.

HOWEVER, NEW POSTERS DO NOT GET A SECOND CHANCE. YOU ONLY GET ONE SHOT AT MAKING A FIRST IMPRESSION, SO MAKE IT A GOOD ONE.

THANK YOU
~

Those who say it cannot be done should not interrupt those who are doing it
  • #52,509
  • Sep 5, 2012 7:48am Sep 5, 2012 7:48am
Quoting FXSwissTrader
I'm out! 100+ pips E/U - Value area low & near psychological 1.25 level to yesterday afternoon's POC high volume area. Should have been patient with G/U. Would've been a 200+ pip morning. Sell limit is sitting at 1.2620. Hope everyone made pips!
congrats....
patience and trade entry/exit scaling is I think will be key for more pips for G along with patience...

wow take a look at EA its still very strong....resistance at 12376 area
if that breaks then 1.252x is next resistance.
Wooooohooooo or Boooooohooooo
  • #52,510
  • Sep 5, 2012 7:52am Sep 5, 2012 7:52am
Ok. To have a significant and lasting impact on Spanish and Italian bond yields the ECB intervention into bond markets may need to be of the order of hundreds of billions ? Correct ?
Add that to the 209 billion euros worth of previous bond purchases the ECB is already draining every week from the system.

Then Spanish and Italian banks which are loaded with their domestic sovereign debt and are likely to sell some of it to the ECB are not necessarily the ones that would bid at the ECB’s cash draining operations.

They will have to come up with something I suppose.

Quoting PipTrapper
That's a great question and I just so happen to have the answer.

The former SMP program is already at 209 bln, so any more bond buying will just add to that amount they will have to sterilize every week.
Inflation in things we need, Deflation in things we want.
  • #52,511
  • Sep 5, 2012 7:53am Sep 5, 2012 7:53am
Quoting gnomoneey
congrats....
patience and trade entry/exit scaling is I think will be key for more pips for G along with patience...

wow take a look at EA its still very strong....resistance at 12376 area
if that breaks then 1.252x is next resistance.

As I mentioned on Monday, E/A should continue possible uptrend to 1.2410 area where it should at least run into the 6 month POC high volume area. If it breaks, to the moon alice (1.2830) then (1.3025).
  • #52,512
  • Sep 5, 2012 7:56am Sep 5, 2012 7:56am
Quoting FXSwissTrader
I'm out! 100+ pips E/U - Value area low & near psychological 1.25 level to yesterday afternoon's POC high volume area. Should have been patient with G/U. Would've been a 200+ pip morning. Sell limit is sitting at 1.2620. Hope everyone made pips!
Nice going Swiss! As usual
I observe your reality but live my own.
  • #52,513
  • Sep 5, 2012 7:59am Sep 5, 2012 7:59am
Quoting Cgb
Nice going Swiss! As usual
Thanks guys. Sell limit cancel due to BOC rate decision. Will watch how the profile reacts at these levels today.
  • #52,514
  • Sep 5, 2012 8:01am Sep 5, 2012 8:01am
BOC talking about hiking rates soon. Very bullish BOC release. WTF?
  • #52,515
  • Sep 5, 2012 8:01am Sep 5, 2012 8:01am
Quoting Thijs
Ok. To have a significant and lasting impact on Spanish and Italian bond yields the ECB intervention into bond markets may need to be of the order of hundreds of billions ? Correct ?
Add that to the 209 billion euros worth of previous bond purchases the ECB is already draining every week from the system.

Then Spanish and Italian banks which are loaded with their domestic sovereign debt and are likely to sell some of it to the ECB are not necessarily the ones that would bid at the ECB’s cash draining operations.

They will have...
True they are not necessarily the ones to bid at the 1 week auctions, but they may still do it anyway. Here's the reasoning.

If ABC bank is holding 20bln in 2 year Spanish bonds, that is a significant risk to hold on the books. So if they sell those bonds for cash (and a profit), then they can buy up the notes the ECB sells in their auctions and earn 0.75% until such time as they decide to take some or all of that cash and purchase something with a higher yield but less risky than 3 year Spanish bonds. Maybe a 30 year Greek bond (J/K)
Those who say it cannot be done should not interrupt those who are doing it
  • #52,516
  • Sep 5, 2012 8:06am Sep 5, 2012 8:06am
German finance minister speaking.
  • #52,517
  • Sep 5, 2012 8:07am Sep 5, 2012 8:07am
Quoting FXSwissTrader
BOC talking about hiking rates soon. Very bullish BOC release. WTF?
they've been saying that all year...they are trying to slowdown household spending and debt.
but they've been postponing every meeting and threatening to raise just to keep the market on their toes
Wooooohooooo or Boooooohooooo
  • #52,518
  • Sep 5, 2012 8:08am Sep 5, 2012 8:08am
Quoting gnomoneey
they've been saying that all year...they are trying to slowdown household spending and debt.
but they've been postponing every meeting and threatening to raise just to keep the market on their toes
I know they've been trying to convince markets they will raise rates earlier this year but IMO they are in no condition to be doing so.
  • #52,519
  • Sep 5, 2012 8:12am Sep 5, 2012 8:12am
Quoting FXSwissTrader
BOC talking about hiking rates soon. Very bullish BOC release. WTF?
I'm not sure how you arrived at that. The rate statement says pretty much what last month's statement said... that

"Canadian exports are projected to remain below their pre-recession peak until the beginning of 2014, reflecting the dynamics of foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar."


And

"To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments."

Those who say it cannot be done should not interrupt those who are doing it
  • #52,520
  • Sep 5, 2012 8:13am Sep 5, 2012 8:13am
Sell limit added at 1.2625 with tight SL in the event 1.2630 breaks hard to the upside. Will cancel if it doesn't hit today.
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